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On June 28, Massachusetts Governor Charlie Baker (R) signed House Bill 4640, “An Act Relative to Minimum Wage, Paid Family Medical Leave, and the Sales Tax Holiday,” into law. We summarized the key points of the legislation last week. Today’s bulletin will focus on the paid leave provisions.

The paid leave law establishes a Department of Family and Medical Leave within the Executive Office of Labor and Workforce Development, which will be responsible for administering a paid leave program. Although the program will not become fully effective until 2021, employers’ compliance obligations will begin in the summer of 2019.

COVERAGE AND AVAILABLE LEAVE

Employers covered

Unlike the FMLA, the Massachusetts law will apply to all “employers,” as that term is defined in MGL c. 151A, section 1. There is no minimum number of employees to trigger employer coverage. However, municipalities, districts, and political subdivisions or their instrumentalities are not subject to the law unless they voluntarily adopt it.

Persons covered

A “covered individual” is defined as (1) an employee whose employment has been with an employer in Massachusetts, regardless of length of service with the employer or hours worked; (2) a self-employed individual who has elected coverage under the law and reported required self-employment earnings; or (3) a former employee, assuming that the employee has not been separated from employment for more than 26 weeks at the start of the former employee’s family and medical leave. (Because the paid leave will be in the form of wage replacement paid through a state fund, non-employees as well as employees can be eligible for paid leave.)

Qualifying leave

Effective in 20211, covered individuals may take paid family leave for the following reasons:

to care for a family member who has a serious health condition;

to bond with the employee’s child during the first 12 months after the child’s birth or the first 12 months after the placement of the child with the employee for adoption or foster care;

because of any qualifying exigency arising out of the fact that a family member is on active duty or has been notified of an impending call or order to active duty in the Armed Forces; or

to care for a family member who is a covered service member with a serious injury or illness incurred or aggravated in the line of duty.

“Family member” includes the covered individual’s spouse, children, and parents, as well as domestic partner, grandchildren, grandparents, siblings, and parents of a spouse or domestic partner.

Also effective in 2021, covered individuals may take paid medical leave for their own serious health conditions. A “serious health condition” is “an illness, injury, impairment or physical or mental condition that involves (i) inpatient care in a hospital, hospice or residential medical facility; or (ii) continuing treatment by a health care provider.”

Amount of paid leave available

Covered individuals taking leave for qualifying reasons will be entitled to

up to 12 weeks of paid family leave per benefit year;

up to 20 weeks of paid medical leave for the worker’s own serious health condition per benefit year;

up to 26 weeks of paid family leave per benefit year to care for a family member who is a covered service member.

A covered individual may not take more than 26 weeks, in the aggregate, of paid family and medical leave in the same benefit year.

Intermittent or reduced schedule leave

Intermittent leave (sporadic) or leave on a reduced schedule basis (such as leave that requires the covered individual to work part-time) is permitted for the individual’s own serious health condition, for care of a family member with a serious health condition, or for care of a covered service member. Paid family leave for child bonding or to address qualifying exigencies arising out of deployments may not be taken intermittently or on a reduced leave schedule unless the employer and employee agree otherwise.

Interaction with other laws and employer policies

Paid family and medical leave will run concurrently with any other applicable leave the employee may take under the FMLA or the Massachusetts Parental Leave Act. Employers can also require that payment be made concurrently or otherwise coordinated with payment made or leave allowed under the terms of employers’ pre-existing policies or the terms of a collective bargaining agreement. (The employee must receive the greater of the various benefits that are available for the covered reasons.)

If the leave provided under a policy or collective bargaining agreement is used for a reason covered by, and is paid at the same or a higher rate than that provided under, the paid leave law, then the time off will count against the employee’s leave allotment under the paid leave law, provided that the employer provides written notice to employees that this will be the case.

Benefits accrual during leave

During the period of leave, the employee continues to accrue vacation time, sick leave, bonuses, advancement, seniority, length of service credit, and other employment benefits. The employer must continue to provide for and contribute to the employee’s group health insurance, if any, as if the employee were not on leave.

Restoration rights

Upon return to work, an employee must be restored to his or her previous position or an equivalent position, with the same status, pay, employment benefits, length-of-service credit, and seniority as of the date of leave. However, an employee returning from leave is not entitled to more favorable treatment than similarly situated employees. (For example, if the employer lays off all of the employees in the leave-taking employee’s department, it may lay off the leave-taking employee as well.) Nonetheless, the leave-taking employee must retain the priority for recall, bumping, or reinstatement that he or she had when the leave began.

LEAVE BENEFITS

After a seven-day waiting period, covered individuals on family or medical leave may receive a wage replacement from a newly established Family and Employment Security Trust Fund. The weekly benefit amount is capped at $850 a week (80 percent of the individual’s actual weekly wage up to 50 percent of the state average weekly wage, plus 50 percent of the individual’s weekly wage above that amount, up to the cap). The Director of the Department of Family and Medical Leave may adjust this maximum weekly benefit amount on or before October 1 of each year to be 64 percent of the state average weekly wage. If the Director does so, the change will take effect on the following January 1.

The Family and Employment Security Trust Fund will be funded by a payroll tax on employers at an initial contribution rate of 0.63 percent of the employee’s wages as follows:

For employers with 25 or more employees,

For medical leave, the employer must remit the full contribution to the Trust Fund. However, an employer may not deduct more than 40 percent of the contribution required from that employee’s wages.

For family leave, the employer may deduct up to 100 percent of the contribution from the employee’s wages. (Forthcoming regulations are expected to address how these deductions will work.)

For employers employing fewer than 25 employees in Massachusetts, the employer “shall not be required to pay the employer portion of premiums for family and medical leave.”

Reduction of leave benefits

Paid leave benefits will be prorated for covered individuals who take leave on an intermittent or reduced leave schedule.

The weekly benefit amount will be reduced by the amount of wages or wage replacement that a covered individual receives under any of the following while on family or medical leave:

Workers’ compensation (other than for permanent partial disability incurred prior to the family and medical leave claim),

Other state or federal temporary or permanent disability benefits, or

Permanent disability benefits under an employer’s policy or program.

The weekly benefit amount will not be reduced by the amount of wage replacement that an employee receives while on family or medical leave under any of the following conditions, unless the aggregate amount an employee would receive would exceed the employee’s average weekly wage:

An employer’s temporary disability program, or

An employer’s paid family or medical leave policy.

If an employer makes payments to an employee during any period of family or medical leave that are equal to or greater than the amount required under the new law, the employer will be reimbursed “out of any benefits due or to become due from the trust fund for family or medical leave benefits for that employee covering the same period of time as the payments made by the employer.”

Private Plan option

Employers may apply for approval to meet their obligations through a private plan. A private plan must confer all of the same rights, protections and benefits provided to employees under the law. For example, the leave must be provided under all the terms and conditions specified in the law, the wage replacement must be at least equivalent to the amount that would have been provided under the law, the employer must impose no additional terms and conditions on employees seeking to take leave under the private plan, and the cost to employees must not be greater than the cost they would incur under the law.

The private plan can be in the form of self-insurance, provided that an appropriate surety bond is paid to the state in a form to be approved by the Department of Family and Medical Leave, and in the amount required by the Department.

An employer may choose to one type of leave (medical, or family) using an approved private plan and the other type of leave using a public plan under the law.

The Department may withdraw approval for a private plan when terms or conditions of the plan have been violated. Employee remedies (discussed below) under a private plan are the same as employee remedies available for public plans. Denial of family or medical leave benefits by a private plan shall be subject to appeal before the Department of Family and Medical Leave and then in the district court within the judicial district in which the covered individual lives or was last employed.

ENFORCEMENT AND REMEDIES

Required posting

Effective July 1, 2019, Massachusetts employers must post a notice of benefits available under the new law in a conspicuous place at each of their premises. The notice must be prepared or approved by the Department of Family and Medical Leave, and must be in English and any other language that is the primary language of five or more employees or self-employed individuals (independent contractors) at that workplace.

Beginning July 1, 2019, employers must, within 30 days after each employee’s start date, provide written information (prepared or approved by the Department) in the employee’s primary language, explaining the benefits available to employees under the new law including rights to reinstatement and continuation of health insurance, the employee’s contribution amounts and obligations, the employer’s contribution amounts and obligations, and instructions on how to file a claim for family and medical leave benefits. Delivery of this information will be considered to have been made when an employee provides a written acknowledgement of receipt of the information or a signed statement indicating the employee’s refusal to sign an acknowledgement. Employers must provide the same written information to each self-employed individual with whom it contracts, at the time the contract is made, delivered in the same fashion (written acknowledgement or signed statement indicating refusal to sign an acknowledgement).

Failure to comply with these notice requirements will result in a civil penalty. The first violation will cost an employer $50 per employee or self-employed individual with whom it has contracted, and the employer will be fined $300 per employee or self-employed individual with whom it has contracted for each subsequent violation.

Retaliation and interference

The law prohibits retaliation against individuals who exercise their rights under the law, as well as interference with their rights (such as denial of paid leave to which the individual is entitled). Any negative change to an employee’s status or adverse employment action against an employee during a leave or within six months of the leave creates a presumption of retaliation, which the employer may rebut with clear and convincing evidence that the action was taken for a non-retaliatory reason. The anti-retaliation provisions also create a rebuttable presumption of retaliation for employees who participated in proceedings or inquiries relating to the law within six months of the termination of proceedings.

Statute of limitations and remedies

The statute of limitations for violations of the job restoration, benefits accrual and continuation, and anti-retaliation provisions, is three years. A prevailing plaintiff may recover three times the value of lost wages and benefits, plus interest, costs, and attorneys’ fees. In addition, injunctive relief – including reinstatement – may also be awarded.

LOOKING AHEAD

The Department of Family and Medical Leave will publish proposed rules, regulations, and procedures by March 31, 2019. After comments from the public are received and considered, Final Regulations will be promulgated by July 1, 2019. Although paid leave will not actually be available to covered individuals until 2021, employers’ obligations will begin in 2019. Accordingly, employers should start planning for the law’s potential impact now. Among other things, employers should consider the following:

How the paid leave under the law will interact with the employer’s existing leave policies or terms of collective bargaining agreements

Whether to pursue the private plan option

Whether and how much of the tax to deduct from employees’ pay

In addition, employers will need to begin drafting the mandatory written notices to employees, and employer leave policies may have to be amended to reflect the laws’ requirements.

Constangy will soon be offering a webinar on the paid leave law, so be on the lookout for an email with the date, time, and details. Employers with operations in Massachusetts will undoubtedly have many questions regarding the details of the new law, the benefit amounts, the amount and initiation of new payroll taxes, and how the program will interact with other leave laws and company leave policies.

The statute provides inconsistent effective days and needs to be clarified. Section 30(iv) of the Act says that “leave benefits will be paid on January 1, 2021,” but Section 34 of the Act says that Section 2(b)--leave for a serious health condition--takes effect on July 1, 2021.

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